23 March 2017 by lberuti

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The credit market was a bit soft first thing this morning. However, as the day progressed, a general risk-on tone emerged in the higher beta CDS names. In particular, UK retailers were active following NXT’s ( Next Plc ) numbers. Since 2016, its 5-year risk premium has experienced a bumpy ride, and has been on a constant widening trajectory. Many analysts thought that guidance would be lowered again today, but NXT’s CEO surprised them by maintaining his forecast that profit will fall between £680mln and £780mln. With the fall in the pound since the vote to leave the EU spurring inflation and squeezing disposable income, the mere confirmation that no additional weakness should be expected was enough to cheer investors. They sent the stock up 8% and the 5-year CDS a more modest 4bps tighter at 132bps.